Updated on: Thursday, November 04, 2021, 10:49 PM IST

States add further sparkle to Diwali by reducing VAT on petrol and diesel

Results in petrol and diesel prices falling between Rs 7 and Rs 17 a litre in these states, mostly ruled by the BJP

It is not just the Centre, but several state governments have also come forward and reduced taxes on petrol and diesel to provide bigger relief to consumers from all time high fuel prices this Diwali.

Buckling under pressure, the government had on Wednesday cut Central excise duty on petrol by Rs 5 per litre and that on diesel by Rs 10 a litre. This cut is in the range of Rs 5.7 to Rs 6.35 per litre for petrol across the country while diesel rates have been cut by Rs 11.16 to Rs 12.88.

Since states charge local sales tax or VAT not just on the base price but also on the excise duty levied by the Centre, the total incidence of price reduction is higher. The reduction is larger in states with higher VAT.

For instance, in Uttar Pradesh, petrol and diesel prices have not fallen by just Rs 5 and Rs 10 per litre, respectively, due to the central excise duty cut, but by over Rs 12 per litre due to the VAT cut by the State. Likewise, in Haryana, where the government has also reduced VAT, both petrol and diesel will be cheaper by Rs 12 per litre. The Karnataka government has also announced that it is going to reduce the VAT on both petrol and diesel by Rs 7 per litre.

Goa saw an additional Rs 5.47 a litre cut in petrol and Rs 4.38 on diesel. Gujarat, too, witnessed an additional reduction of Rs 5.65 a litre on petrol and Rs 4.32 on diesel. Incidentally, all these are BJP-ruled states.

In Delhi, the reduction in petrol price was Rs 6.07 per litre and that on diesel Rs 11.75; the lowest reduction in petrol price was in Dadra and Nagar Haveli and Daman and Diu, where the rate was cut by Rs 5.7. Rajasthan saw the biggest drop of Rs 6.35 a litre.

For diesel, Chennai had the lowest reduction of Rs 11.16 per litre while Odisha had the biggest -- at Rs 12.88 a litre.

Petrol will cost Rs 103.97 per litre in Delhi, as against Rs 110.04 earlier; diesel rates accordingly will diminish to Rs 86.67 per litre from Rs 98.42. In Mumbai, petrol price has been cut by Rs 5.87 to Rs 109.98 and diesel by Rs 12.48 to Rs 94.14. Kolkata saw the price of petrol being reduced by Rs 5.82 to Rs 104.67 and that of diesel by Rs 11.77 to Rs 89.79.

The petrol price in Chennai has been reduced by Rs 5.26 to Rs 101.40 and diesel by Rs 11.16 to Rs 91.43.

VAT rates differ from state to state, leading to differential rates of fuel. The duty cut announced on Wednesday night was the highest-ever reduction in excise duty.


Based on April to October consumption numbers, the loss of revenue to the Union government due to the excise duty cut will be Rs 8,700 crore per month. This totals to an annual impact of over Rs 1 lakh crore, industry sources said. For the remainder of the current fiscal, the impact would be Rs 43,500 crore.


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Published on: Thursday, November 04, 2021, 10:50 PM IST